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A charge card is a type of electronic payment card that works similarly to a credit card but requires you to pay the entire statement balance in full every month. Like a credit card, a charge card does require a credit application for approval and allows you to make purchases that can be paid at a later date. \nTypically, charge cards are used by high-earning individuals or businesses. Unlike credit cards, charge cards don’t have a capped spending limit or interest and offer reward benefits to the cardholder—however, these cards generally do come with a high annual fee. \nRead more about charge cards, how they differ from credit cards, and how they can benefit your business ventures.\nCredit cards vs. charge cards \n\nCharge cards and credit cards are very similar, sharing common characteristics such as rewards and perks. However, there are some key differences between the two. Explore all the differences between them below.  \nCharge cards don’t have a set spending limit  \nWith credit cards, you’re assigned a credit limit upon signing up. If you exceed this limit, the credit card may be declined. With charge cards, this does not apply—but the issuer might still restrict how much you can spend using the card. \nDuring your credit check, factors such as credit history, income, any debt, etc. determine how much you can spend with a charge card. \nBills for charge cards must be paid in full \nWith charge cards, your balance needs to be paid in full, usually monthly. The balance does not carry over to multiple months like credit cards. \nInstead of having to pay your balance in full each month, credit cards allow you to pay a partial, minimum balance each month to avoid the late fee.\nCharge card advantages \n\nCharge cards can be a very beneficial \npayment method\n for business owners who need to make large purchases. Plus, since charge cards don’t have a preset spending limit, they can also provide a form of \nemergency funding\n for your business. Read more to learn about the advantages of charge cards. \nNo preset spending limit  \nCharge cards do not have a preset spending limit like credit cards do. This is advantageous if you or your business is planning on making a large purchase. \nAlthough there is no spending “limit,” there are still certain limitations based on your payment history, card use, credit record, and other factors, which are dependent on the card provider you’re using.  \nCarries no interest or debt \nSince you’re required to pay off the entire balance of a charge card, debt is not accrued. If you don’t pay the entire balance, most issuers won’t allow you to keep using the card, which also prevents debt from increasing. Debt is easier to accrue with credit cards since you’re able to roll over balances into future months.  \nAdditionally, charge cards don’t charge interest fees like credit cards do. Credit cards often charge high interest rates that average about 18% if you don’t pay the balance in full. \nOffers perks and rewards\nSimilar to credit cards, charge cards are well known for their generous perks and rewards. For example, many charge card providers offer up to triple points on travel and dining experiences, credits for making purchases, and purchase points. \nThe only type of reward that charge cards don’t offer that credit cards do is 0% interest promotions (since there’s no interest with charge cards) and no option for balance transfers since the card needs to be paid off in full. \nCan help boost your credit score\nIf you use your charge card responsibly and make payments on time, then your FICO credit score can be boosted. Additionally, the balance carried on a charge card won’t negatively affect your credit like it would with a credit card. \nHelps you become financially disciplined\nSince charge cards require you to pay your entire balance in full each month, they help you not to spend more money than you’re able to immediately pay back. With charge cards, there’s no “pay it back later” mentality.  \nNot paying the statement in full results in late fees, so that’s even more motivation to stay disciplined and on top of your payments. This can result in better financial health in the long run.   \nDrawbacks of charge cards\n\nCharge cards aren’t for everyone, and it’s important to be aware of their disadvantages. Here are some factors to consider before getting a charge card:\nMandatory monthly payment in full\nCharge cards require you to pay in full each month, so if you’re carrying a steep balance and you’re either not prepared or don’t have the funds to cover it, it can cause issues. \nIf you’re unable to pay the statement balance in full, the issuer is likely to charge a late fee, which is often around $40. Depending on the issuer, you also may not be allowed to put additional charges on the card until that balance is paid in full. \nHigh annual fees \nCharge cards carry very high annual fees compared to credit cards, which often offer very little to no annual fees. If a credit card issuer does charge an annual fee, it’s usually an average of $100. Typically, charge cards cost anywhere from $95 to $500 a year. \nCould encourage impulsive purchases\nSince there’s no spending limit on charge cards, it could encourage impulsive spending for those who aren’t financially cautious. Charge cards require more discipline than credit cards since you’re required to pay off all funds each month rather than let the balance carry over. \nCredit required \nA charge card usually requires a good to excellent credit score for approval. If you have bad credit, however, there are still options—credit cards have better acceptance rates for those with a lower credit score. \nOptions are limited\nUnlike credit cards, where there are countless issuers and options to choose from, charge cards are more limited and potential customers have fewer options. The main issuers include American Express and Brex. Charge cards are also not as widely accepted as credit cards at retail stores. \nCharge cards and credit scores \nCharge cards have a minimal effect on credit scores since they don't have a preset limit and are not included in credit utilization, however a material percentage of your credit score is payment history, so paying on time is beneficial to you. Late charge card payments are reported to credit bureaus, just like credit cards. Late payments can stay on your report for up to seven years and can affect your score.  \nCharge cards and credit cards may have many characteristics in common, but there are some differences between them when it comes to how they affect your credit score. \nCredit profile inquiries\nSimilar to a credit card, applying for a charge card is likely to result in the issuer reviewing your credit report. This results in a hard inquiry, which may drop your credit score slightly and will last on your report for around two years. \nFICO credit score \nPayment history is the most important factor in determining your FICO credit score. Paying your charge card bill on time will boost your credit score. Charge cards are also reported to credit bureaus, so demonstrating a strong payment history will put you in good standing. \nIs a charge card the right fit for your goals?\nCharge cards are great for businesses that are just starting out and need to make large purchases and pay \nbusiness bills\n. With this guide, you can determine if charge cards are the right fit for you, whether you’re an entrepreneur or a new business owner. \nSolo makes it easy to pay, get paid, and track spending\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay, get paid, and keep track of your spending. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cash out your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at \nSolo.co\n.

What is a charge card? The difference between charge cards and credit cards

In this article:\nStart brainstorming\nSolve a problem\nDon’t look for a completely unique business idea\nStart doing something\nTalk to professionals\nDo market research\nDetermine the costs\nDetermine the time commitment\nTalk to your personal network\nStarting a business is a big decision and a great step toward independence in your career. Before you can start a business though, you need to have a solid idea to get off the ground. \nComing up with a business idea and deciding the type of business you want to run is the most important part of starting a business. We’ll walk you through some important steps in determining what kind of business you should start. \nStart brainstorming about small business ideas\nWhen you start your own business, you should make sure it’s something that you’re passionate about and enjoy. This will help you find the motivation to keep it going when times get tough. \nSo, to find your passion, start brainstorming. \nGet a sheet of paper or jump onto a Google doc and make a list about yourself. List the things that you really enjoy doing and things that you’re good at. These can be things like “I’m really good with kids,” “I enjoy talking to people,” “I’m organized,” “I’m great at strategic planning,” etc. \nOn another page, make a list of things that you really don’t prefer to do or aren’t particularly good at. Maybe you’re great at talking to people one-on-one but you don’t like talking to large groups or making big presentations. Write those things down. \nLet the creative juices start flowing and keep writing until you have an expansive list of things about you that can help you to determine the perfect type of business for you to run. \nman brainstorming for small business startup ideas\n\nYour idea for small business should solve a problem\nUltimately, your business idea should solve a problem for someone—and it doesn’t have to be a problem that no one’s ever solved before. \nIf you’re good at landscaping and lawn care, look at what it takes to start a lawn-care business. It’s been done before, but it’s perfectly fine to enter into a market that has some competition. \nThink about a common problem that people have and will have for many years to come. Then, come up with an idea that solves that problem, whether it’s a new way of fixing an old problem or the same way that other businesses are already solving the problem (just better). \nDon’t look for a completely unique small business idea\nThis may seem like an odd suggestion, but most ideas that you come up with aren’t going to be totally unique. You might think of some grand idea only to go look it up on Google and someone is already doing it. That’s OK!\nBusiness ideas that are already in use are proven to be successful, and competition is a necessary aspect of the free market. If you think you can excel with a business idea that someone else has already started, then give it a try and look for ways that you can make it better. \nOn the other side of this coin, if you start a business that is \ntoo\n unique, consumers probably won’t know that it’s even a service or product that they need and won’t think to look for it. \nIn this online world, coming up with a business that people already need and are searching for is going to help you immensely. \nWe aren’t trying to discourage you from being unique, we just want to bring up these points for your awareness in your search for the perfect business idea. \nA unique business idea can succeed if you’ve done the research on the need/desire for it and know how to market it well. For example, an existing \nsmall business idea can work in a small town.\n The people in that town would probably appreciate a regular laundromat if they don’t already have one!\nStart doing something\nDon’t just wait around for an idea to fall into your lap. Start doing something. Maybe you don’t have your business idea totally figured out, but you know what you’re good at doing, so do it.\nStart freelancing and taking on side jobs that relate to specific skills that you enjoy using. Use those side gigs to determine if you’d be interested in starting something like that full-time. \nYou might find that you don’t enjoy doing those things as much as you thought you did, or you may decide that you’ve hit on a great idea and have a great place to start from. \nTalk to small business professionals\nWe cannot stress this one enough. Talk to a lot of professionals who have started their own businesses or who help run businesses in the industry that you’re interested in. \nYou don’t have to do this all on your own, nor should you. Plenty of people have started successful businesses before you, so take advantage of their experience and ask questions to help guide you in the right direction. \nUpon talking to people in your desired field, you may decide that this is the perfect route for you, or you might find out that it’s not at all what you thought it would be. \nYour local chamber of commerce or SBA association can be a big help in networking with local businesses and getting you talking with the right people.\nDo market research\nAs you start to really narrow down the ideas for your new business, do a lot of market research. You need to determine if your business idea is even a viable solution for the demographics you would serve in your specific location. \nHere are some questions to look into during this process:\nWho would benefit from this business idea? \nIs there enough demand in your target location to provide profits?\nHow would your business solve your target customer’s problem?\nWhat would motivate consumers to choose you over competitors?\nWho would your competitors be?\nHow does your audience view your competitors?\nWhat are your competitors doing to get customers?\nHow would people purchase from you (online, in-store, through affiliates)?\nHow would you reach your target audience (marketing strategies)?\nDetermine the costs of starting a small business\nIf there seems to be a good demand for your business idea and it makes sense from a market research perspective, then it’s time to determine if it makes sense for you personally from a financial perspective. \nWhat will the costs be for you to start up this business? Will you be financing everything yourself, or will you be seeking out investors or loans?\nDepending on the type of business you are starting, there could be a decent amount of capital that you need to get off the ground. So make sure you know what your costs will be before diving all in. \nDetermine the time commitment of your small business idea\nAlong with costs, starting a business also requires a huge time commitment. Maybe you’re starting small as a side gig, so it only takes a small amount of your time at first. But as you get more clients, that could change quickly. \nDetermine what kind of time will be necessary for the business idea you’ve come up with and plan accordingly. \nIf you don’t have the time to devote to getting this business idea into action, then it might not be the idea for you, or it may not be the right time to start a new business. \nRun your small business idea by your network\nWhen you have thought through your new business idea or even before this point, you should run your idea by your personal network of people that you trust. Talk to friends, family members, mentors, and get their thoughts on your idea. \nSometimes when we get a new idea, we get so emotionally invested in it that we haven’t thought through all of the risks that could come with it. \nTalking to people you trust and letting them give their feedback can help bring up points that you didn’t think about. 

How to decide what kind of small business you should start

In this article:\nSole proprietorship vs. incorporation\nTypes of incorporations\nHow to incorporate your small business\nWhen you first start your business, a sole proprietorship makes sense, especially if you are your only employee. But at what point should you take the next step to incorporate your business?\n \nAs your business starts to grow, there are several advantages that incorporating can offer you. There’s definitely a lot to think about as you’re considering taking that next step with your business, so we’ve provided a great starting point for your research with this article. \nSole proprietorship vs. corporation\nFirst, let’s define sole proprietorship versus corporation. \nA sole proprietorship is a business that is owned and run by one person. In this type of enterprise, the business and the owner have no legal distinction and are essentially the same entity. \nAn incorporated business (a corporation) is a company that is formally recognized as a separate entity in the eyes of the law. Once incorporated, the business is its own legal structure separate from the individual/s who started it.\nAdvantages of a sole proprietorship\nAs you are starting your business, keeping it simple as a sole proprietorship can make a lot of sense. Some of the advantages of this include:\nYou don’t have to file separate business taxes\nYou have less paperwork because you aren’t required to separate financial statements for your business and yourself\nYou get to keep all of your profits because you are the sole owner\nAdvantages of incorporating your small business\nWhen you decide to incorporate your business, you are turning it into a legally separate entity. The business and the owner are no longer one and the same. \nBecause of this, some things may become a little more complicated, like taxes and financial records. But it provides several advantages that being a sole proprietor doesn’t offer. \nYou can protect your personal assets from lawsuits and bankruptcies because your business and you are separate entities\nEstablishing your business as a corporation gives your business more credibility with customers, vendors, and employees\nAn incorporated business has the potential for better longevity. If you pass away as a sole proprietor, the business goes away with you, but an incorporated business can be passed along to another owner and the business can continue\nBetter chance of securing a business loan \nTypes of corporations\nAs you are considering incorporating your business, it’s important to learn the types of corporations, the advantages of each, and the purposes they serve. \nIn simple terms, the main differences between each type of corporation are the ways that taxes are handled.\nfile tabs with LLC S corp C corp for how to incorporate small business\n\nLLC\nLLC is a \nlimited liability company. \nLimited liability means that the owners of the company are not personally responsible for any debts or lawsuits that the business may incur. LLC members (another term for the owners) don’t have to put their personal assets on the line to cover lawsuit settlements. \nThat being said, there are some similarities between an LLC and a sole proprietorship to keep in mind. An LLC is kind of a stage in between a sole proprietorship and a full corporation. It combines some elements of both types of business structures.\nTaxes are one such thing in an LLC that are more similar to the structure of a sole proprietorship. The LLC doesn’t pay its own income taxes; the owners list their business profits and losses on their personal tax returns. \nWith an LLC, you can choose to tax your business as a corporation, but there are some additional tax laws and filing requirements to consider (learn more under the S corporation section below). \nThere are some distinct differences between an LLC and a corporation that you should consider before deciding which direction to take:\nIt only takes one business owner to form an LLC; you don’t need to have multiple members to get started\nIf you run a business in the banking, trust, or insurance industry, you can’t form an LLC\nSome states prohibit additional types of businesses from forming an LLC, so learn what your state requirements are before pursuing this option\nC corporation\nA C corporation is owned by shareholders of the company and, as such, its profits are taxed differently from any other type of corporation. A C corporation is required to elect a board of directors to oversee policies and make business decisions for the company.\nMajor advantages that a C corporation has over other types of corporations:\nC corporations usually have a lower risk of being audited\nYou can deduct the cost of benefits as a business expense (for example, you can write off the costs of health plans for your employees)\nThe corporation’s profits are taxed, and then the profits can be split among the owners (usually saving money on taxes for the individual owners)\nC corporations can have an unlimited number of stockholders\nForeign nationals can invest in C corporations\nS corporation\nAn S corporation is not a type of business entity like an LLC or C corp. Rather, it is a way to designate how your business will be handling its taxes. The IRS only classifies businesses as one of the following when it comes to taxes:\nSole proprietorship\nPartnership\nC corporation\nS corporation\n“LLC” is not an option when determining how to handle your business taxes because in an LLC you have to choose whether to file taxes as a sole proprietorship, partnership, or corporation. \nThat’s where S corporation comes in. This is the designation you can choose on your taxes for your LLC business if you want to be taxed as a corporation. \nThe main difference between taxing your business as a sole proprietor and an S corp is the way Medicare and Social Security taxes are handled. Sometimes, LLC owners can save money here by choosing to file as an S corp. \nAdvantages to taxing your business as an S corp:\nThe owner reports an individual salary which counts as an expense for the business on tax returns\nMedicare and social security taxes are only paid from each individual’s salary, not all business profits\nincome tax documents return for S corp for how to incorporate small business\n\nHow to incorporate your small business\nYou might already have a pretty good idea of which type of corporation will work best for your business. But no matter which way you choose to file, the following steps are important as you start the process of incorporating your business. \nConsult an attorney\nFirst, find a good attorney. Unless you are an expert business lawyer yourself, it’s likely that you’ll miss some things along the way, so protect yourself by consulting an attorney to help you hit all the right steps. \nAn attorney will be familiar with compliance, local licensing and zoning laws, and the proper paperwork for filing your incorporation. \nDetermine which type of corporation is right for you\nDo your research on the purposes and advantages of each type of corporation. Which is the best for your business?\nAre you a solo business owner and just want to keep your business and personal assets separate? Then an LLC could be a good route for you to take to protect yourself as an individual from any lawsuits that may come up related to your business. \nOr, maybe you have multiple owners, several employees, and/or a number of people interested in becoming shareholders. Then a C corporation might make more sense for you. \nTalk to your attorney about the tax implications of each type of corporation that you are considering and use that to help you decide which way to file your business. \nFind a business name\nWhen you file your business as a corporation, you need to have a unique business name. You won’t be allowed to choose a name that is already in use in your area because that will confuse consumers.\nSo, come up with several different options for a business name. Most secretary of state offices even have an online business name search where you can see which names are already registered. Use these resources to help you come up with something unique. \nName a registered agent\nA registered agent is someone that can accept mail on behalf of your company. When your business becomes a corporation, you are required to have a registered agent. This can be the owner of the company, your business attorney, or another director or employee within your company so long as they reside in the same state as your business. \nThere are even online services that you can pay to act as your registered agent. \nWrite articles of incorporation\nEvery corporation has to write their “articles of incorporation.” This is typically a one to two-page document that includes the following information:\nExplanation of your corporation’s purpose\nYour business’s name and address\nNames and addresses of each member of your board of directors\nNames and addresses of each officer of the corporation\nThe duration of your corporation (usually forever)\nYour attorney should be familiar with this process and can help you draft up your articles of incorporation. There are also online legal sites that offer assistance with this for a small fee. \nFile articles of incorporation with your state\nOnce you have your articles of incorporation written, you need to file them with your state. There is a fee associated with this—usually anywhere between $100 and $500 depending on your state—so be prepared for that. \nThis document should be filed with your secretary of state, and you can usually do this through their website. Find your secretary of state’s website and follow their instructions for filling your articles of incorporation. \nObtain business permits and licenses\nAfter your business is registered with the state, you need to obtain any and all business licenses and permits that are required for your particular business type (if you don’t already have these). Your attorney can help you determine what you need here. \nOpen a bank account for your business\nNow that your business is a separate entity for you as an individual, you need to open a separate business bank account. This will help you keep accurate records of your business’s finances. \nAll of the steps leading up to this point should be sufficient for an LLC. If you are choosing to establish a C corporation, continue with the next three steps. \nWrite your corporate bylaws\nCorporate bylaws lay out how your corporation is to be structured. They should have information about your shares, voting rights, how to replace board members, and other such details. \nTypes of information that you might include in your bylaws:\nTypes of shares that can be issued by the corporation\nInformation about shareholder and board meetings\nHow loans, contracts, and other transactions will be approved by the corporation\nProcedures for financial audits and how often they should occur\nInformation about the fiscal year\nProcedures for amending corporate bylaws\nYour corporate bylaws help keep structure within the business and are typically much more detailed than your articles of incorporation. These will help board members and shareholders stay accountable to the business. \nKeep a book of corporate records\nAs you incorporate your business, you should start keeping a “book” of corporate records. This is a record of all relevant documents for your corporation. This doesn’t need to be a physical book, but can (and probably should) be kept in your digital records for ease of access. \nItems to keep in your corporate records:\nArticles of incorporation\nCorporate bylaws\nMinutes of shareholder and board meetings\nAll stock transactions\nAnnual reports\nBusiness loan documents\nAny contracts the business enters into\nCommercial real estate transactions\nHold a board meeting\nOnce you have all of your records in place and have registered your corporation with your state, you are almost there! The last step is to hold your first board meeting to make everything official. \nAgenda for this first board meeting should include the following:\nBoard member formally adopt the bylaws and articles of incorporation\nA corporate seal is decided on\nIssue shares of stocks to initial shareholders\nElect your CEO, CFO, and other officers\nKeep a record of the minutes of this board meeting and all future board meetings. \nComplete any other state and federal requirements\nNo matter which type of corporation you are filing as, be sure you complete all state and federal requirements that apply to your business. Discuss these with your attorney. \nOnce this is done, your business is officially incorporated! This whole process can be completed within weeks if you enlist the right attorney and do your initial research to understand how everything works. 

How and when to incorporate your small business

Knowing how to show proof of income if you’re self-employed can feel daunting, especially since you’re likely not earning a set amount each pay period. Showing proof of income for self-employed workers requires additional preparation and organization than it usually does for the traditional employee. \nWith this guide, showing proof of income if you’re \nself-employed\n is easier than ever. Read on to learn about why you need to show proof, the specific documents you need, and other tips.  \nWhat is proof of income?\nProof of income is paperwork that provides insight into your earnings during a certain period of time, usually a full year. The documents are proof that what you say you make is what you actually make. Those that require proof of income usually include: \nInsurers\nBanks \nLandlords\nCredit companies \nUtility providers\nThese entities will use proof of income paperwork to determine if you are qualified and able to make payments on time for an extended period. \nWhy proof of income matters\n\nThere are certain instances in life where you’ll need to show proof of income, typically whenever lending money is involved. This documentation is required for activities such as: \nFiling taxes\nApplying for a credit card \nObtaining health insurance \nApplying for a rental \nApplying for personal loans \nLeasing a car \nApplying for a mortgage \nAside from filing taxes, these events involve issuers letting you borrow money—this requires a certain level of trust that you’ll be able to pay back what’s owed. Proof of income matters because it’s the proof that you have funds and cash flow to make payments. \nHow to show proof of income when you’re self-employed\n\nFor full-time employees at traditional workplaces, showing proof of income is easy—all you need is a W2, a pay stub, or tax returns. Self-employed individuals can typically provide the same information, but there are a few caveats with each: \n1. Tax returns  \nOne of the easiest ways to show proof of income is through your annual tax returns. A tax return is a legal form from the Internal Revenue Service (IRS) that states your total earnings and expenses for the year. \nIf you’re purchasing a large item, such as a home, the more detail you can provide in your tax returns the better. If you don’t have this form on hand when you need to show proof, you can alternatively provide your 1099 forms. \nCaveat: \nSelf-employed individuals don’t always have to report income that is below a certain threshold, so tax returns may be an underestimation of your total income for that period. \n2. 1099-MISC form \nA 1099-MISC form is used to report miscellaneous as well as non-employee business compensation for freelancers, contractors, sole proprietors, independent contractors, and self-employed individuals. It’s a record stating that a person or entity paid or gave you money for services. This form is one of the more commonly used forms in the 1099 series. You are able to file this form through the IRS online. \nCaveat: \nYou must have made at least $600 in the past year as a self-employed worker to receive this form. \n3. Bank statements \nBank statements can be used to show your income if you’re self-employed or have a side hustle. These statements can come from a savings or checking account, credit card records, or an investment account. These details are usually included in a bank statement: \nInformation about your bank and its contact information\nAccount details, like your bank account number and name \nA summary of transactions, including withdrawals and deposit\nA period of time summarized within the bank statement\nCaveat: \nIf the bank statements you show are from a personal account, be sure to go through and clearly separate your personal expenses and business expenses before presenting this info as proof of income.\n4. Profit and loss statement\nProfit and loss statements are forms that \ntrack your revenue\n, costs, and expenses from your business over the course of a year. Normally, profit and loss statements cover the following: \nYour revenue\nYour expenses \nBusiness-related deposits\nNet profits \nCosts of goods sold \nThese statements can be created on your own or with the help of credit companies.\nCaveat: \nProfit and loss statements are more easily accessed by those who operate their own businesses, but an accountant or software can help you obtain these forms if you’re a freelancer. \n5. Online payment records \nIf you’re a freelancer or sell your services or products online, chances are you use an online payment method through a service provider. These providers usually offer monthly or yearly breakdowns of payments received and issued from your account. \nCaveat: \nNot all of your income may be tracked on these platforms, but it at least provides proof that you do have a steady cash flow.  \nProof of income considerations\n\nHere are a few considerations and tips to keep in mind to make showing proof of income as simple and successful as possible:  \nStay organized:\n To make showing proof of income easier, stay as organized as possible and keep track of all business expenses and payments. \nAsk ahead of time:\n Knowing which documents lenders require will also make the process smoother. Get in touch with lenders ahead of time to see what they need. \nKeep copies of your deposit slips: \nKeeping a paper trail of deposit slips can provide proof of income since they’re a record of money going into your account. \nProof of income made simple \nShowing proof of income for the self-employed is still important even if you’re working for yourself, but it doesn’t have to be complicated. After being self-employed for a while, you’ll have a larger paper trail of proof and documentation and it will become easier to provide each time. \nIf you’re starting your own small business, be sure to invest in a \ncard processing system\n or \ncharge cards\n to make accepting payments from new customers easier. \nSolo makes it easy to pay, get paid, and track spending\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay, get paid, and keep track of your spending. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cash out your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at \nSolo.co\n.

Proof of income for self-employed: What you need + tips

In this article:\nAdvantages of starting a home-based business\nDisadvantages and caveats to having a business in your home\nThinking of leaving the rat race? Sick of hearing Taylor Swift on your office sound system? Want to spend more time at home with your family or significant other? You may be ready to start a home-based business.\nHowever, it’s not all beer and skittles, as our grandpappy used to say. There are significant and unique benefits, but there are a lot of potential downsides also.\nLets go over some things you should be aware of before you start a home-based business.\nWe’ll give you the bad news first:\nDisadvantages and caveats to starting a home-based business\nRestrictive local and federal laws and zoning regulations\nDepending on where you live and what type of business you’re thinking of starting, you may be subject to local or federal statutes.\nBe sure to consult your local zoning laws, chamber of commerce, city business organizations, federal regulations, and HOA bylaws to make sure it’s even legal to run a business out of your home.\nDifficulty separating work time from family time\nPeople who create home-based businesses may have a hard time keeping “home” and “work” time and resources separated.\nMany times, everything at home becomes subsumed in “the business” and this can cause a lot of friction with family or significant others.\nwife angry with busy husband working from home\nWork hard to maintain dedicated “work hours” and “work space” at home, and try to leave it all behind at the end of your workday.\nMore interruptions\nDepending on how “hands on” you are expected to be with your significant other, spouse, or kids, you may experience more interruptions to your workday when you have a home-based business. \nOf course, a brick-and-mortar shop can have a lot of interruptions as well, but an owner might consider them part of the cost of doing business.\nIt may help to take a similar approach at home and look at these interruptions to your concentration or tasks as part of the price you pay to receive all the benefits of working from home (and there are some great ones! See below).\nDifficulty getting funding \nInvestors, banks, and other purveyors of business capital may view home-based businesses as “less serious” than brick-and-mortar shops, and you might have a harder time justifying loans, cash flow advances, or other needed funding.\nbusiness loan form denied for home-based business\nThis is likely not a serious concern if you have a solid business plan and take your home-based business as seriously as you would a “real shop,” but it could potentially be a concern for some investors and you should be aware of it.\nKeeping accurate records is vital\nAre you organized? Can you maintain very accurate transactional, financial, and tax records? If not, don’t start a home-based business.\nExcellent financial records are essential for \nany\n business, but smaller businesses, particularly sole proprietors who work from home, face a higher risk of getting audited by the IRS, so it is crucial to keep impeccable records and all your receipts in an organized way. \nBusiness and personal expenses can be difficult to separate\nSince your business space and your domicile are now the same, this can create a headache when you face the need to keep your business and home expenses separate and distinct.\nBe ready to accurately estimate and record any use of personal space, vehicles, resources, utilities, etc. if you want to get the tax benefits of starting a home-based business (see the “tax deductions” section below).\nWarehousing or shipping concerns \nIf you sell products and have to worry about maintaining inventory and warehousing/shipping products, a home-based business can make things more difficult. \nIt is sometimes possible to find enough warehouse space at home, but this comes with a host of potential gotchas (local laws, pests, appropriate climate control and security, and angry spouses are just a few). \nGo deeper: Read our \ncomplete guide to fulfilling and shipping orders\n to learn more about some of these concerns and issues.\nPayment processing or accepting alternative payment methods\nSimilar to what you’d need for a brick-and-mortar business, you’ll need some way to take customers’ payments if you start a home-based business. \nSome holdouts still transact mostly by check, but for businesses that sell goods and services it’s pretty much table stakes to take credit and debit cards, which can add significant expense.\nBe sure to talk to your friendly processor representative or merchant service provider and see what kind of a deal they can cut you. Don’t pay for features you won’t need as a home-based business.\nNow that we’ve touched upon some of the potential downsides of starting a home-based business, let’s get to the good stuff.\nThinking about finding commercial space instead of starting a home-based business? Read our article on the \ntop things to consider before renting your first business space\n.\nAdvantages and benefits to a home-based business\nReduced business overhead\nIf you don’t have to pay for business premises, upkeep, or a commercial lease, you can drastically reduce your cost of doing business. \nSince you can share the utilities, maintenance, supplies, and mortgage expense with your primary domicile, and aren’t under any revenue-sharing obligations from a commercial lease, you can save huge… and don’t forget about your tax deductions. \nTax deductions for home-based businesses\nYou might be surprised to learn the tax benefits of having a home-based business.\nWhen you run your business out of your home, you can “write off”—or deduct from your taxable income—an amazing array of expenses, including all or part of your advertising costs, gifts for customers, business banking fees, business loan amortization and interest, “office expenses” and supplies, phone and internet lines, subscriptions to trade publications or newspapers, even a portion of your mortgage, mortgage insurance, homeowner’s insurance, maintenance, utilities, and HOA fees! \nHere’s a great article about all the various \nhome business tax deductions\n available to you.\nMore control of your business and personal environment\nBrick-and-mortar store owners have some say in how their store looks, feels, sells, and operates, but make no mistake, the commercial landlord and lease owner can be quite annoying and forceful in their demands regarding your facilities and finances. \nRead our article on \nhow much it costs to rent space for a small business\n to learn more.\nIn addition, retail customers have expectations about when you should be open, how your store should operate, what music you play (or don’t), what holidays you take off, etc.\nWhen your business operates out of your home, you make the call. \nAnd, you can structure your home workspace however you want. No more Backstreet Boys blasting from the office speakers (unless that’s your bag. You do you).\n\nWhen you’re free from the corporate nightmare of the open plan office or cube farms, when you’re free from noisy environments, smelly co-workers, annoying salesmen, and other distractions… you can make your home business work space a nirvana of creativity and productivity.\nWear what you want\nThis may not seem like a big deal to some people, but for others it can be incredibly freeing to not have to put on the restrictive, button-down corporate costume, strangling tie, powerskirt, or other stuffy, uncomfortable business attire.\nIf you find you work effectively rolling out of bed and working in your jammies and bunny slippers, go right ahead. (We suggest at least combing your hair and putting on a shirt for business video conference calls, though… don’t ask.)\nWork when you want\nHome-based businesses typically don’t have a string of customers stopping by who expect you to be “open” 12 hours a day, six days a week.\nIf you find you’re most productive late at night and prefer getting into a “groove” and working a marathon 14-hour stretch, there’s nothing to stop you (depending on family/relationship needs).\n3 a.m. brainstorm sessions? No prob. Want to dial it back or take some time off? If it’s financially feasible, go ahead. You make the call.\nIf you prefer to keep regular “business hours,” you can do that while still maintaining more flexibility for personal relationships. \nEasy commute!\nPeople who have worked in locales where the typical commute can average an hour (or two!) each way have expressed to us that they almost don’t know what to do with all the time they have when they start a home-based business.\nMore accessibility to family or significant others\nWhen you don’t have to commute or be at work at a certain time, you can be more flexible in your schedule and be there when your spouse, kids, or significant other need your attention.\n\nLive wherever you want \nThere may be some limitation to this depending on what type of business you run, but if you’re a one-person shop that produces products or services delivered via remote warehousing, drop shipping, or digital transmission, you can likely run your business from any location with a reliable internet connection or cell-phone signal.\nWant to live in a treehouse in Borneo? Make it happen, captain! Looking to \nstart your business in a small town\n? Go for it!\nMore time at home for what’s important… and for yourself\nWhen you don’t have to be “at work” to keep up appearances or conform to others’ expectations, you can take the time you need to meditate, cook, exercise, read, listen to music, or whatever else fills up your personal batteries. \nThis can mean you do better work and be more productive in addition to being happier and more personally fulfilled. And isn’t that why we work in the first place?

Advantages and disadvantages of starting a home-based business

In this article:\nMarket research questions to ask before starting your business\nQuestions to ask your target audience\nWhat questions to ask your current customers\nMarket research questions to ask about your competitors\nWhether you’ve been in the game for a while or you are just starting up, market research is an important part of any successful business. It helps you identify the best opportunities for gaining new customers and growing your business. \nBut where do you start? It can be difficult to know which questions are important to ask and what the answers to those questions might mean for your business. \nWe’ll guide you through the most important market research questions you should ask before starting your small business. \nWe’re going to break these questions up into four categories: \nGeneral\nTarget audience\nCurrent customers\nCompetitors\nLet’s get started! \nMarket research questions to ask yourself before starting your business\nIt’s always a good idea to narrow down your market before diving too deep into the nitty-gritty details. Asking general market research questions will help you do that. Ask these questions of your market to determine the potential reach that your business could have in your current market. \nHow big is our potential market?\nYou’ll want to know the potential that your business has for growth. A larger market generally means more opportunity. A market that is too small or narrow may not provide much room for growth. \nHowever, a narrow market doesn’t mean to avoid it altogether. You may just need to expand into multiple markets for better growth potential.  \nIs this market going to grow or shrink? How much?\nDetermine what the growth trends are for your market. A growing market, again, provides more opportunity. Research the trends and learn whether your market is growing or declining. \nTrends can change, so don’t get discouraged if things aren’t looking up. But be realistic about your income if you choose to enter a declining market. \nimage of people holding up a market growth arrow for small business research\n\nAre there other products/services similar to ours? What are they?\nIt’s good to know what else is out there. Look for products or services that are similar to your offerings and learn more about them so you can do it better. You don’t want consumers to think that you are simply ripping off something that already exists. \nWho are our primary competitors? What is their market share?\nYou need to know who your competitors will be and what share of the market they already own. If they completely dominate the market for your business offerings, it’s going to be much more difficult to enter as a newbie. \nLearn everything you can about your competitors (we’ll have some more questions on this below). \nIs there any significant market share available for us?\nFind out what the demand is for your prospective business offerings. Is there a growing demand and are consumers looking for other options? What share of the market could you potentially grab hold of?\nMarket research questions to ask your target audience\nLearning more about your target audience will help you determine who your ideal customers are and how you can best market to them. You need to learn what makes them tick and how you can solve their problems with your offerings. \nThese questions are a little more straightforward and don’t require additional explanation:\nHow old are they?\nWhere are they located?\nWhat is their income?\nWhat is their profession?\nWhat is their household size?\nWhat is their gender, age, race?\nWhat interests do they have?\nWhat do they need?\nWhat problems do they face each day?\nWhat objections will they have to your business?\nWhat does a typical day look like for them?\nWhat do they enjoy doing?\nWhere do they currently shop?\nHow do they like to make purchases?\nWhere do they spend most of their time?\nWhat media outlets are they using?\nattractive woman average customer for market research\n\nMarket research questions to ask your current customers\nIf you are in the research phase of a new potential business, you likely don’t have customers yet. But you’ll need to test out your offerings, so use those people to determine how your customers would respond to the following questions. \nDo you like the product/service?\nDid our offering solve a need for you?\nWhat did you like most about this product/service?\nWhat did you like least about it?\nHow does this offering fit into your daily workflow?\nHow would you rate your experience with our company?\nWould you recommend us to a friend?\nIf you don’t have existing customers or haven’t tested out your offerings yet, ask these questions to people who use similar products/services. \nwoman pressing virtual emojis during market customer research survey\n\nMarket research questions to ask about your competitors\nYou are going to want to know what you’re up against as you start your new venture. Get to know your competitors on a personal level and through the eyes of their customers. \nWho are your main competitors?\nWhere are they located?\nWhat are they doing well?\nWhat could they do better?\nWhat offerings do they have? Is it more or less than what you plan on offering?\nAre their offerings different from yours?\nWhat are their prices like? Can you compete with that?\nWhat benefits/value do they provide to their customers?\nWhat do their customers like about them?\nWhat potential companies could become competitors in the future?\nHow are they marketing to their customers?\nDo they have good or bad online reviews?\nWhat is their online visibility like?\nThese last couple of questions are key. Online marketing, reviews, and overall visibility in the search engines is something you need to think about as you start your new business. You don’t just have to compete to get customers to visit your physical storefront (if you have one) but also to get them to visit your digital storefront. 


33 articles found in “Business 101”

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How to decide what kind of small business you should start

How and when to incorporate your small business

Proof of income for self-employed: What you need + tips

Advantages and disadvantages of starting a home-based business

Important market research questions to ask before starting a new business

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